Rewarding switching over loyalty

It took about 8 weeks for the marketing department at Charter Communications to catch-up with my decision to cut the cable TV cord. Considering the size of Charter, I’m impressed with the turn around time to add me to the prospective customer list mailings. New subscriptions are up for Charter and the company is doing well in spite of serious market pressures from alternative forms of media content and broadband services. But wait, what just happened here?

Rewarding switching and quitting over loyalty.

The offer that marketers make to prospective customers for reduced rate services during the first 12 months of service continues to add friction for customer loyalty. Consider the madness. I received an offer in the mailer equivalent to the pricing I had with Charter before I cancelled my service. When Charter notified me that my special pricing was over and that my rates were increasing I called to cancel service. During that call, no one tried to retain my business. 20+ years of cable service loyalty gone in a flash.

Cable and cellular providers are judged by Wall Street on the metric of number of new subscribers. So we are left with a system where the guy who has paid for cable service for 20+ years is paying a higher rate than the guy who just switched from somewhere else. We have a system where a customer can quit and then wait 8 weeks to be offered a better rate of service than he had when he was an existing customer.

Who is the winner?

The winner is the guy who quits the game altogether or jumps from one provider to another. But this isn’t how companies known for customer service do business is it? This isn’t what they teach in MBA class. This type of behaviour isn’t even really logical either. What customer likes to be treated like this?

“Profit in business comes from repeat customers; customers that boast about your product and service, and that bring friends with them.” ~ W. Edwards Deming